Smile, We’re All Doomed – as usual. The UK Economic Pessimism Index

The most recent poll by Ipsos-MORI shows a slight narrowing of the gap between the Tories and Labour, but still gives the Tories a 10-point lead (see here).

More worrying for the Tory opposition, and a bit more pleasing for Prime Minister Gordon Brown, should be the figures on people’s attitudes to the economy.

This shows a rating for economic optimism index (EOI) of -29 points (those that think things will improve minus those that think they’ll get worse). This may sound dire, but two things should be noted.

First the trend is upwards – since September 2008 when the gloom hit its low point the EOI negative score has almost halved (Slide 18).

Second, the economic optimism index is probably the wrong name – we Brits are a pretty gloomy bunch when it comes to the economy, despite all the ‘irrational exuberance’ we’ve supposed to be exhibiting in recent years. The pollsters have been tracking British economic optimism (their word, not mine) since 1979 (Slide 20). What this shows is that our average ‘optimism’ over the past 30 years has been running at -17 points, so it would be more reasonable to call this the economic pessimism index (EPI).

If we take that EPI average -17 points as the baseline then public attitudes to the economy are fast returning towards just our ‘normal’ level of pessimism. And interestingly Ipsos-MORI tell me the average level of concern re unemployment since 1974 is 38% and we’re only at 23% at the moment. All of which ought to be worrying for the Tory high-command and bring a glimmer of cheer to Labour.

If Bill Clinton’s famous dictum that “it’s the economy, stupid” is right then politics is going to get a lot tighter in the next few months if current EOI/EPI trends continue 🙂